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Bill allowing developers to count site improvements as inventory passes Senate

Bill allowing developers to count site improvements as inventory passes Senate

Mitch Coffman
March 21, 2012
Mitch Coffman
March 21, 2012

On Tuesday, the Senate passed House Bill 519 on a 28-7 vote, which would allow developers of a parcel of land to exempt taxes for site improvements.

Sen. Lee Heider, R-Twin Falls, carried the bill on the floor and said it will provide Idaho with the ability to provide land to prospective businesses for shovel-ready projects.

There are four stages to land development, according to Heider. Stage one is simply when the developer buys the land and leaves it as is. Stage two is when the land is platted; that is, when plans are drawn for the location of roads, sewers, power lines and other infrastructure needs. Stage three is when those things are actually put in place. The last stage is when buildings are finally erected, whether they are commercial or residential.

Essentially, those infrastructure parts are the developer’s inventory. “For the purpose of this bill, we’re trying to help developers be able to carry this inventory just like a grocer, just like a car dealer, who doesn’t pay taxes on his inventory until such time as there are two triggers in place,” said Heider.

Those two triggers include the property being sold to another developer and/or the property is built on.

Heider, who is a developer himself, said that developers take all of the risks when they invest money into a project, sometimes hundreds of thousands, or even millions, of dollars.

“It is important for every community to have shovel-ready projects,” he said. Heider referenced satellite company DIRECTV coming into the Boise area. According to him, the company wanted a parcel that was ready to be built on, found one that had the infrastructure already in place, and bought it. “They began construction within two weeks (of the purchase), not months, not years.”

Sen. Tim Corder, R-Mountain Home, was also in strong support of the bill, and discounted criticism that the bill was the same as the “developer’s discount” that Idaho used to have.

Corder said that the 2005-06 the Legislature repealed that discount, which gave land developers an exemption from the time the parcel was bought (stage one) until the time construction began (stage four).

Corder echoed Heider in saying the bill provides an avenue for businesses to start building and be up and running rather quickly. “The positive impact is that some of these developments will actually be able to make a few improvements and be shovel-ready on the commercial side.” The senator said that some businesses will be able to be in business within a year’s time because parcels will have the needed infrastructure in place.

Though there wasn’t much debate against the bill, Sen. Joyce Broadsword, R-Sagle, did ask to explain her no vote during roll call. She said, “There’s been some serious concerns raised by all four of the assessors from my district, and I can’t in good conscience vote for this bill. So, I vote no.”

The bill passed the House 57-12 in February. It now heads to Gov. Butch Otter’s desk for his consideration.

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